Question

roberto and reagan are both 25 percent owner/managers for bright light enterprises. roberto runs the retail store in sacramento, ca, and reagan runs the retail store in san francisco, ca. bright light generated a $126,050 profit companywide made up of a $75,300 profit from the sacramento store, a ($25,750) loss from the san francisco store, and a combined $76,500 profit from the remaining stores. if bright light is taxed as a partnership and decides that roberto and reagan will be allocated 70 percent of his own store's profit with the remaining profits allocated pro rata among all the owners, how much income will be allocated to reagan?

Answer 1

Reagan's total income allocation would be:

($18,025) + $49,295 = $31,270

Step-by-step explanation:

The first step is to calculate the total profit to be allocated among the owners, which is the sum of the profits from all the stores:

$75,300 + ($25,750) + $76,500 = $126,050

Next, we need to determine the amount of profit allocated to Roberto and Reagan's stores. Roberto is allocated 70% of $75,300, which is:

0.70 x $75,300 = $52,710

Reagan is allocated 70% of ($25,750), which is:

0.70 x ($25,750) = ($18,025)

The remaining profit to be allocated pro rata among all the owners is:

$126,050 - $52,710 - ($25,750) = $98,590

Now, we need to determine the total ownership percentage of all the owners. Since Roberto and Reagan each own 25%, the remaining owners must own:

100% - 25% - 25% = 50%

Finally, we can calculate Reagan's allocation of the remaining profit:

0.50 x $98,590 = $49,295

Therefore, Reagan's total income allocation would be:

($18,025) + $49,295 = $31,270